Section 80C Deductions: Complete List for FY 2025-26
Section 80C offers up to ₹1.5 lakh in tax deductions — but most taxpayers do not use it optimally. This guide covers every eligible investment and expense, with practical advice on which instruments to choose.
Section 80C Deductions: Complete List for FY 2025-26
Section 80C of the Income Tax Act is the most widely used tax-saving provision in India. It allows individuals and Hindu Undivided Families (HUFs) to claim deductions of up to ₹1.5 lakh per financial year from their gross total income — reducing their taxable income and, consequently, their tax liability.
Yet despite its popularity, most taxpayers do not use Section 80C optimally. Many are unaware of the full range of eligible investments and expenses, and many make suboptimal choices — locking money in low-return instruments when better options are available.
This guide covers every eligible investment and expense under Section 80C, the sub-limits that apply, and practical guidance on choosing the right instruments for your situation.
Important: Old Tax Regime vs. New Tax Regime
Section 80C deductions are only available under the old tax regime.
If you have opted for the new tax regime (which is now the default for FY 2025-26), you cannot claim Section 80C deductions. The new tax regime offers lower tax rates but eliminates most deductions and exemptions.
Before claiming 80C deductions, ensure you have opted for the old tax regime in your ITR.
The ₹1.5 Lakh Limit
The aggregate deduction under Sections 80C, 80CCC, and 80CCD(1) combined cannot exceed ₹1.5 lakh in a financial year.
Additionally, Section 80CCD(1B) allows an additional deduction of up to ₹50,000 for contributions to the National Pension System (NPS) — over and above the ₹1.5 lakh limit.
So the maximum total deduction available is ₹2 lakh (₹1.5 lakh under 80C/80CCC/80CCD(1) + ₹50,000 under 80CCD(1B)).
Complete List of Section 80C Eligible Investments and Expenses
1. Life Insurance Premium
Eligible: Premiums paid for life insurance policies on your own life, your spouse's life, or your children's lives (including step-children and adopted children).
Limit: The premium must not exceed 10% of the sum assured (for policies issued after 1 April 2012). If the premium exceeds 10% of the sum assured, the deduction is restricted to 10% of the sum assured.
Important: The policy must be in force. If the policy lapses within 2 years of commencement, the deduction claimed in earlier years is reversed and added back to income.
Tip: Term insurance is the most cost-effective life insurance — it provides maximum coverage at the lowest premium, leaving more of your ₹1.5 lakh limit for higher-return investments.
2. Employee Provident Fund (EPF)
Eligible: Employee's contribution to EPF (12% of basic salary + dearness allowance, deducted from salary).
Limit: No specific sub-limit — subject to the overall ₹1.5 lakh cap.
Note: The employer's contribution to EPF is not eligible for 80C deduction (it is exempt from tax separately). Only the employee's contribution qualifies.
Returns: EPF currently earns 8.25% per annum (FY 2024-25 rate), tax-free on maturity (subject to conditions).
3. Public Provident Fund (PPF)
Eligible: Contributions to your own PPF account, your spouse's PPF account, or your children's PPF accounts.
Limit: Minimum ₹500, maximum ₹1.5 lakh per year per account.
Lock-in: 15 years (with partial withdrawal allowed from year 7).
Returns: Currently 7.1% per annum, compounded annually. Interest is tax-free. Maturity proceeds are tax-free. PPF is one of the few completely EEE (Exempt-Exempt-Exempt) instruments.
Tip: PPF is ideal for long-term, risk-free tax-saving. The 15-year lock-in is a discipline enforcer, and the tax-free compounding makes it highly effective over long periods.
4. National Savings Certificate (NSC)
Eligible: Investment in NSC (VIII Issue) at post offices.
Lock-in: 5 years.
Returns: Currently 7.7% per annum, compounded semi-annually but paid at maturity.
Tax treatment: Interest accrued each year is deemed to be reinvested and is eligible for 80C deduction in subsequent years (except the final year). Maturity proceeds are taxable.
5. Tax-Saving Fixed Deposits (5-Year FDs)
Eligible: Fixed deposits with scheduled banks with a minimum lock-in of 5 years, specifically designated as tax-saving FDs.
Lock-in: 5 years (premature withdrawal not permitted).
Returns: Typically 6.5%–7.5% per annum (varies by bank). Interest is taxable as income from other sources.
Tip: Tax-saving FDs are the most liquid 80C instrument after the lock-in period, but the taxable interest makes them less efficient than PPF or ELSS for taxpayers in higher tax brackets.
6. Equity Linked Savings Scheme (ELSS)
Eligible: Investments in ELSS mutual funds (also called tax-saving mutual funds).
Lock-in: 3 years — the shortest lock-in among all 80C instruments.
Returns: Market-linked — historically 12%–15% CAGR over long periods, though returns are not guaranteed.
Tax treatment: Long-term capital gains (LTCG) above ₹1.25 lakh per year are taxed at 12.5%. Dividends are taxable as income.
Tip: ELSS is the best 80C instrument for wealth creation. The 3-year lock-in is the shortest available, and the equity exposure provides the highest potential returns. Ideal for investors with a 5+ year horizon and moderate to high risk tolerance.
7. Senior Citizens Savings Scheme (SCSS)
Eligible: Investments by individuals aged 60 years or above (or 55 years for those who have taken voluntary retirement).
Limit: Maximum ₹30 lakh per individual.
Lock-in: 5 years (extendable by 3 years).
Returns: Currently 8.2% per annum, paid quarterly. Interest is taxable.
Tip: SCSS offers the highest guaranteed return among all 80C instruments and is ideal for retirees seeking regular income.
8. Sukanya Samriddhi Yojana (SSY)
Eligible: Contributions to SSY accounts opened for a girl child below 10 years of age.
Limit: Minimum ₹250, maximum ₹1.5 lakh per year per account. Maximum 2 accounts per family (one per girl child).
Lock-in: Until the girl child turns 21 (partial withdrawal allowed at 18 for education/marriage).
Returns: Currently 8.2% per annum, compounded annually. Interest is tax-free. Maturity proceeds are tax-free. SSY is EEE — completely tax-free.
Tip: SSY is the best instrument for parents of girl children — higher returns than PPF with the same EEE tax treatment.
9. Home Loan Principal Repayment
Eligible: Principal repayment on a home loan taken for purchase or construction of a residential property.
Limit: Subject to the overall ₹1.5 lakh cap.
Important conditions:
- The property must not be sold within 5 years of possession. If sold within 5 years, the deduction claimed is reversed and added back to income in the year of sale.
- Only the principal component qualifies under 80C. The interest component is deductible separately under Section 24(b) — up to ₹2 lakh for self-occupied property.
Stamp duty and registration charges paid for the property also qualify under 80C in the year of payment.
10. Tuition Fees
Eligible: Tuition fees paid for full-time education of up to 2 children of the taxpayer, at any school, college, university, or educational institution in India.
Limit: Subject to the overall ₹1.5 lakh cap.
Not eligible: Development fees, donation, building fund, transport fees, hostel fees, or any other fees beyond tuition.
Important: Only the taxpayer's own children qualify — not siblings, parents, or other relatives.
11. Unit Linked Insurance Plans (ULIPs)
Eligible: Premiums paid for ULIPs (insurance-cum-investment products).
Conditions: Same as life insurance — premium must not exceed 10% of sum assured.
Tax treatment: Maturity proceeds are tax-free if the annual premium does not exceed ₹2.5 lakh. If annual premium exceeds ₹2.5 lakh, maturity proceeds are taxable as capital gains.
Tip: ULIPs have historically underperformed compared to a combination of term insurance + ELSS. Consider carefully before choosing ULIPs primarily for tax saving.
12. National Pension System (NPS) — Section 80CCD(1)
Eligible: Contributions to NPS Tier I account — up to 10% of salary (for salaried employees) or 20% of gross total income (for self-employed).
Limit: Subject to the overall ₹1.5 lakh cap under 80CCD(1).
Additional deduction: An additional ₹50,000 is available under Section 80CCD(1B) — over and above the ₹1.5 lakh limit.
Returns: Market-linked — NPS has historically delivered 9%–12% CAGR depending on the asset allocation chosen.
Tax treatment on maturity: 60% of the corpus can be withdrawn tax-free at retirement. The remaining 40% must be used to purchase an annuity (pension), which is taxable as income.
13. Pension Plans — Section 80CCC
Eligible: Contributions to pension plans offered by insurance companies (LIC and other insurers).
Limit: Subject to the overall ₹1.5 lakh cap.
14. Infrastructure Bonds (Section 80CCF)
Note: Section 80CCF (infrastructure bonds) is currently not in force. It was available for a limited period and has not been extended for FY 2025-26.
Summary Table
| Instrument | Lock-in | Returns | Tax on Returns | Best For |
|---|---|---|---|---|
| EPF | Until retirement | 8.25% | Tax-free (conditions) | Salaried employees |
| PPF | 15 years | 7.1% | Tax-free (EEE) | Long-term risk-free saving |
| ELSS | 3 years | Market-linked (~12-15%) | LTCG at 12.5% above ₹1.25L | Wealth creation |
| NSC | 5 years | 7.7% | Taxable | Conservative investors |
| Tax-saving FD | 5 years | 6.5-7.5% | Taxable | Capital preservation |
| SSY | Until child turns 21 | 8.2% | Tax-free (EEE) | Parents of girl children |
| SCSS | 5 years | 8.2% | Taxable | Senior citizens |
| NPS (80CCD(1B)) | Until retirement | Market-linked (~9-12%) | 60% tax-free at maturity | Additional ₹50,000 deduction |
| Life Insurance | Policy term | Varies | Tax-free (conditions) | Life cover + tax saving |
| Home Loan Principal | — | — | — | Home buyers |
| Tuition Fees | — | — | — | Parents |
Tax-Saving Strategy: How to Optimise Your 80C
For salaried employees:
- EPF contribution (mandatory) — typically covers ₹50,000–₹80,000 of the ₹1.5 lakh limit
- Top up with ELSS for the remaining limit — best risk-adjusted returns with 3-year lock-in
- Add NPS 80CCD(1B) for an additional ₹50,000 deduction
For self-employed professionals:
- PPF — ₹1.5 lakh per year for risk-free, tax-free compounding
- ELSS — for equity exposure and wealth creation
- NPS 80CCD(1B) — additional ₹50,000 deduction
For parents of young children:
- SSY — ₹1.5 lakh per year for girl child (EEE, highest guaranteed return)
- ELSS — for remaining limit
How AccentTax Consulting Can Help
Tax planning is not just about filling up your 80C limit — it is about choosing the right instruments for your income level, risk tolerance, time horizon, and overall financial goals.
Our tax advisory team provides:
- Personalised tax planning for individuals and HUFs
- Optimisation of deductions under 80C, 80D, 80CCD(1B), and other sections
- ITR filing with all eligible deductions claimed correctly
- Advance tax computation to avoid interest under Sections 234B and 234C
Contact us for a tax planning consultation before the financial year ends.
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